Agenda item

Draft Budget, Council Tax Precept and Medium Term Financial Plan 2018-19

Meeting of Cheshire Fire Authority, Wednesday, 14th February, 2018 10.30 am (Item 4.)

Minutes:

Cheshire Fire Authority was required to approve its budget and set the Council Tax precept for the financial year commencing 1^st April 2018. In determining a budget that it considered reasonable, the Authority was required to have regard to all relevant factors, including the likely impact of policy options on the achievement of the Authority’s objectives and uncertainties associated with the economic scenario.

The Treasurer presented the report which sought Members’ approval for the Authority’s budget for 2018-19, the Authority’s precept, as required by law, for 2018-19 and its Medium Term Financial Plan (MTFP) for 2018 to 2021. This was the second budget report, with the first being presented at the Fire Authority meeting on 6^th December 2017. Members had also considered the Authority’s financial information at their Planning Days, most recently in January where Members had the opportunity to challenge the assumptions and proposals being put forward by officers as part of the draft budget and MTFP.

The report asked Members to consider three budget proposals, based on:

a) Increasing the Council Tax precept by 2.99% (£75.48 for a Band D property);

b) Increasing the Council Tax precept by 1.99% (£74.75 for a Band D property); or

c) Maintaining the Council Tax precept at its 2017-18 level (£73.29 for a Band D property).

The three budget proposals were detailed in Table 1 of the report. Appendix 1 of the report presented the MTFP modelled on the effect of existing assumptions and showed how the Authority would produce a balanced budget in 2018-19 based on the three budget proposals. In each case there was still a requirement to make savings for 2018/19. The medium term position, looking forward up to 2021, showed that the Authority would still be required to make savings despite further increases in Council Tax in future financial years. The MTFP was based on a number of assumptions including savings relating to proposed changes at Crewe and Ellesmere Port in the base budget. These savings would have to be funded from other compensating savings identified or future contributions from reserves if they were not delivered as planned. The current reserves strategy took account of the fact that reserves could be used to fund the second fire engines at Crewe and Ellesmere Port.

The Treasurer informed Members that the Government consultation on the Fire and Rescue National Framework made reference to reserves and the need for Fire Authorities to have a policy on reserves. It also stated the level of General Reserve would need to be justified if it was over 5% of the revenue budget. This figure was broadly accepted by Local Government Finance officers as being an appropriate level. He proposed that the general reserve be set at 5% as a minimum level and maintained at that level for the medium term. The current reserves strategy, including the forecast level of reserves, was attached as an appendix to the report and assumed that reserves would be used to support the capital programme and also the fact that reserves could be used to fund Crewe and Ellesmere Port, if necessary.

He concluded by stating that a 2.99% increase in precept would provide a better basis for financial planning for future years and a prudent medium term position but reiterated that the Authority would still need to make further savings to balance the budget.

A Member asked for clarification as to why the budget proposed a £40k revenue contribution to capital and also if the level of reserves over 5% had to be justified could the Authority not reduce them further.

The Treasurer explained that there was not a nationally prescribed reserves level but finance officers across Local Government thought it prudent to have a 5% minimum. However this was a decision for each precepting Authority to make. He was satisfied that a general reserve of £2.2m (5% net revenue budget) was prudent.

The Joint Head of Finance explained that the £40k revenue contribution had been used to fund part of the annual replacement programme on short life items such as IT equipment and vehicles. These items had an average lifespan of 3 to 5 years so it was too costly to borrow short term and, as no there was no longer capital funding provided by the Government, the Authority put a pot of money aside each year to cover short life capital expenditure.

A Member stated that he was disappointed that no figures had been provided about revenue underspend in previous years and where it was being spent despite him raising this issue on a number of occasions. He sought clarification on whether it was still the policy of the Authority to use revenue underspend to support capital projects and asked how much of the Authority’s underspend had been redirected to capital projects since 2010. He drew attention to the IRMP reserve and queried if this was being whittled down by capital spend when it could be used to fund the revenue budget. He stated that he was not questioning officers but rather the political decisions made by the Authority over the last few years and added that, in his opinion, some of the capital expenditure such as new stations and firefighter equipment was welcome but some such as the new Safety Centre was not.

The Treasurer confirmed that he would obtain more detailed information in respect of the previous underspends and would provide a written response to all Members.

The Chair thanked Members for their input and proposed a further recommendation (No 9) to be added to the report for Members to consider:

That Cheshire Fire Authority should ask officers to write to the Government as follows:

After eight years of austerity, Cheshire Fire Authority have found £12 million in cuts to their budget, the policy to reduce the Revenue Support Grant to zero by 2020 whilst imposing a cap on council tax is not sustainable.

We call upon the Government to lift the cap to enable local government to have the choice of continuing to make cuts or to increase council tax to balance the budget.

Capital Finance Grants ceased to Cheshire Fire Authority in 2014/15 and so we have had to self finance capital projects. We ask the Government to re-introduce the Capital bid scheme that allows Fire Authorities to bid for capital finance for large capital projects.

The Group spokesperson for the Conservative Party stated that she was pleased to support this additional recommendation and also a 2.99% increase in Council Tax. She added that she did not believe making this decision would pre-determine any other decisions as this was the budget and any decisions made later on the agenda would not change the budget decision.

The Chair concluded that Members had expressed their views and Members were asked to vote on the proposal to increase the council tax by 2.99%. The proposal to increase the Council Tax precept by 2.99% was carried with 20 Members voting in support of the increase (1 Member abstained). The other recommendations were approved (including the additional recommendation).

RESOLVED: That

[1] the budget for 2018/19 (reflecting a 2.99% increase in Council Tax precept) shown in Table 1 to the report be approved;

[2] the Council Tax precept increase of 2.99% for 2018/19 as set out in Table 3 to the report be approved;

[3] the Medium Term Financial Plan shown at the top of Appendix 1 be approved (2.99% increase in Council Tax precept);

[4] the revenue growth proposals for 2018-19 as set out in Appendix 2a be approved;

[5] the revenue one-off proposals for 2018-19 set out in Appendix 2b be approved;

[6] the revenue savings proposals for 2018-19 as set out in Appendix 2c be approved;

[7] the proposed capital programme for 2018-19 set out in Table 2 (para 24) be approved together with its associated financing;

[8] the Reserves Strategy set out in Appendix 4 be approved;

[9] the Statement on Robustness of Estimates set out in Appendix 3 be noted;

[10] the Financial Health Targets (paragraph 27) be adopted for 2018-19; and

[11] officers be instructed to submit the following statement to the Government on behalf of Cheshire Fire Authority:

We call upon the Government to lift the cap to enable local government to have the choice of continuing to make cuts or to increase council tax to balance the budget.

Supporting documents: